Joachim Low accepted that Germany have significant improvements to make ahead of Euro 2016 as they prepare to face Italy in Munich on Tuesday.
The world champions were unconvincing during their qualification campaign despite finishing top of their group and were beaten 3-2 by England on Saturday in Berlin after producing yet another underwhelming performance.
Low still feels Germany are among the favourites for the European championship, but insisted they cannot afford to make the same mistakes that they made against England, where they lost a two-goal lead in dramatic fashion.
"The world champions are automatically among the favourites to win the European title, but so are France, Belgium, Italy and Spain - they all have the ambition to win the title," Low told the official DFB website.
"I did not see Italy's game against Spain, but I have been told they put in a great performance. Italy are always among the favourites at the Euros. They will be very competitive.
"We weren't always convincing during our qualifying campaign and we need to learn from that. We have to improve before the Euros in the summer.
"We allowed England a lot of chances on Saturday and we didn't build our attacks the way we usually do. We had problems with our build-up game throughout the entire match and consequently didn't create many opportunities of our own.
"Our combinations and our movement didn't go as planned. Our organisation and compact positioning was lacking, especially in the second half. We allowed England a crazy amount of space, despite holding a lead. We can't allow that to happen."
Italy, meanwhile, will be high on confidence after recording a 1-1 draw against Spain in a repeat of the Euro 2012 final on Thursday.
Antonio Conte's men have only lost twice since their group-stage exit at the World Cup in 2014 and Simone Zaza is keen to build on that against Germany.
"We are going to Munich to get a victory," the Juventus striker told reporters. "We want to win and show how strong we are.
"I also see it as a chance to get revenge for our Champions League exit against Bayern Munich."
The two sides last met in November 2013 when Ignazio Abate cancelled out Mats Hummels' opener as it ended 1-1 in Milan.
Italy beat Germany in the Euro 2012 semi-final and at the same stage in the 2006 World Cup. Indeed, they have not lost to Joachim Low's nation in seven matches, with their last defeat in the fixture coming back in 1995.